Global Policy Forum

Slow Progress on Land Grabbing Regulation

Wealthy investors are buying land in developing countries, and there is much disagreement over how to regulate transactions. Current economic uncertainty and increasing food price volatility are causing rich countries to become land-buyers in order to ensure their own food security. Such deals negatively impact small farmers and indigenous people who are often evicted from their land. Agricultural investments should promote sustainable development and long-term benefits to local communities rather than profit large companies and land speculators or foreign countries.


November 29, 2010



As wealthy investors continue to buy up agricultural land in the developing world, stakeholders disagree over how to regulate such transactions.

"Everyone agrees that you can't have a wild-west scenario where countries and companies are going into countries and getting land for next to nothing," Michael Taylor, programme manager with the International Land Coalition (ILC), a global alliance of land rights organizations, told IRIN from Rome. "The problem is that there are different entrenched interests and it's hard to reconcile the two sides."

While agricultural investment of this kind is nothing new, what is, says the International Food Policy Research Institute (IFPRI), is that in the current context of economic uncertainty and volatile food prices, an increasing number of countries are becoming land-buyers in a bid to ensure their own food security.

Most deals are in the developing world (more than 70 percent in sub-Saharan Africa) where production costs are lower and regulation of land weaker, to produce food to import back home, says the World Bank.

According to IFPRI, countries rich in capital but with land and water constraints, such as Saudi Arabia, United Arab Emirates and China, are world leaders in this kind of investment.

And it is happening on an unprecedented scale.

According to the World Bank, before 2008, the average annual expansion of global agricultural land was less than four million hectares. But in 2009, following the 2007-2008 food crises, more than 45 million hectares (the size of Sweden) worth of large-scale farmland deals were announced.

"This raises profound moral questions," said Taylor. "How far can rich countries go to secure their own food security?"

Between 2006 and 2009, Saudi investors reportedly paid the Ethiopian government US$100 million per year to lease land for wheat, barley and rice to export back home, tax-free.

Meanwhile, the World Food Programme (WFP) spent over US $300 million, in 2009 alone, delivering 460,000 metric tons of food relief to 5.7 million Ethiopians in need of assistance.

With the latest estimates by the UN Food and Agriculture Organization (FAO) indicating that global agricultural production would have to increase by 70 percent over the next 40 years to feed the world, many worry the situation could get worse.

"We need to ensure on a global scale that we keep up with food demand. If there is a shortage in supply, anxiety will always prevail," said Achim Dobermann, deputy director-general for research with the International Rice Research Institute (IRRI) in Manila.

Local voice ignored

Although proponents argue that such investments create jobs, develop local infrastructure, and introduce new agricultural practices and technology to recipient countries, organizations such as GRAIN, a farmers' rights organization, and IFPRI point to reports of forced evictions as prime examples of how such deals are bad for local farmers or indigenous populations that depend on the land for their livelihoods.

"Agricultural investment should promote sustainable development and long-term benefits to local communities, rather than simply benefiting foreign companies or countries," Henk Hobbelink, GRAIN co-founder and coordinator, said.

The reality is that many local interest groups have no formal title to the land, IFPRI points out. This inequality in bargaining power is exacerbated by weak governance structures in many developing countries.

"These deals are negotiated between very unequal partners. Many host countries in the south aren't very experienced in international negotiations, but really need agricultural investment and are willing to make compromises like selling valuable land, almost for free," said Taylor.

Code of conduct

In April 2009, IFPRI called for a code of conduct for foreign land acquisition, emphasising greater transparency, compensation and respect for local land users, sharing of benefits, environmental impact assessment and adherence to national trade policies.

Indeed, the World Bank has published a set of principles for responsible agricultural investment in Rising Global Interest in Farmland.

However, in October, at the UN Committee on World Food Security (CFS), the top inter-governmental body on food security, civil society representatives rejected the World Bank's principles for responsible agricultural investment, citing a lack of local consultation.

"These principles have been formulated through an exclusive process without the participation of communities and constituencies most affected by agricultural investments," civil society representatives stated at the Committee meeting, calling for a moratorium on large-scale agricultural acquisitions. "What is needed instead is nationally and internationally enforceable laws."

The FAO plans to issue a new set of guidelines, which will include consultations with civil society groups, to be submitted to the CFS next year.

Esther Penunia, secretary-general of the Asian Farmers' Association for Sustainable Rural Development, who attended the CFS in Rome, says that as long as the needs and interests of local stakeholders are met, she will support FAO's guidelines.

"Investments in agriculture should ensure rights of small-scale farmers and... take other forms such as helping farmers to increase productivity and facilitating farmers' access to markets."

IRRI's Dobermann, however, is not optimistic. "At this point, I'm not sure how such an agreement could be enforceable. Is there a precedent that we can follow? How would we implement something like this?"


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